Lucara Diamond Corp. reported that it had made its first rough diamond sale through Clara Diamond Solutions, its fully-owned digital sales platform. The system was successfully launched on November 30 last and final matching was completed on December 16, 2018. A total of seven manufacturers participated in the sale, five of whom matched and received their orders. The Clara system aims at creating a digital rough diamond spot market.
All told, diamonds successfully matched to orders generated revenue of $660,865, achieving 8 percent over Lucara's market price and 15 percent over Lucara's reserve price for these goods. Lucara said goods of approximately similar value have been set aside for the next sale, scheduled to take place later this month.
Lucara said that diamonds will be added onto the platform in the coming weeks gradually, as additional manufacturers are added to the system and in response to increasing variety and size of orders received.
Lucara said that in time, as supply and demand is optimised, it will progress into continuous sales of appropriate, qualifying goods through Clara. Further, Lucara will continue to augment its overall sales strategy through a combination of Clara and its regular tender process.
Lucara CEO Eira Thomas commented, "This trial sale marks a momentous milestone for Clara. On November 30, Clara successfully initiated its inaugural diamond sale with positive results, confirming that the platform is commercially viable.”
She added, “Though we are delighted with the prices achieved for the rough diamonds sold in this first sale, Clara's longer-term value will be realised through its' scalability, increasing the volume of rough diamonds transacted by adding production from other global diamond producers.”
Thomas went on to say, “Onboarding of additional manufacturers is continuing and Lucara is in active discussion with a number of leading diamond producers who are also interested in trialling the platform in 2019.”
This first trial sale, which was conducted in partnership with a select group of large vertically integrated jewellery houses and global diamond manufacturers was designed to demonstrate that Clara can unlock significant value throughout the diamond pipeline, by facilitating rough diamond sales on a stone by stone basis, based on specific polished demand.
Clara will utilise the results of this inaugural sale to help optimise the quantity and selection of rough diamonds offered in the short term, as the platform moves into continuous sales and more participants are added.
Clara uses proprietary analytics, with the latest cloud and blockchain technologies, to sell rough diamonds individually, based on polished characteristics and demand. According to Lucara, the system has transformed the sales process, driving efficiencies and unlocking value for diamond producers and manufacturers alike.
Under an exclusive collaboration agreement with Sarine Technologies, a digital fingerprint of each rough diamond is created and uploaded to the Clara platform with a corresponding asking price. Simultaneously, diamond buyers upload their specific polished diamond requirements in terms of size, cut, color and quality, including their desired purchase price, creating an 'order' within Clara.
The Clara system uses proprietary analytics to match individual, scanned rough diamonds to the buyers' optimal polished requirements. Clara earns the differential between the asking price and purchase price of each match as its revenue and requires a minimum transaction spread to facilitate an optimal match.
The selection of rough diamonds offered in Clara's first sale included diamonds between 1 and 4 carats in size in the better colors and qualities from Lucara's Karowe mine as well as additional aggregated third-party rough. Seven vertically integrated jewellery and global diamond manufacturers placed their polished diamond orders on Clara and the system completed its first digital matching cycle on December 16 with positive results.
The initial sale limited the number of manufacturers to ensure that each participant had a high likelihood of matching orders and receiving stones so feedback could be easily incorporated and monitored.
Data collected from this sale will also provide key metrics to demonstrate the premium Clara can obtain over historical tenders and for rough purchased through long term supply contracts. In co-operation with our manufacturing partners, Clara will analyse both qualitative and quantitative feedback about their experiences as purchasers, at the time of sale and following delivery of the diamonds purchased.
Additional feedback is anticipated as diamonds move through the diamond pipeline into manufacturing and ultimately final retail sale. This test has confirmed that the platform is now ready and has the capacity to on-board additional manufacturers in the short term.
Lucara said that the Clara system:
- Eliminates diamond sales by assortments; facilitates diamond sales "stone by stone" achieving best possible pricing for producers.
- Allows manufacturers to purchase only the diamonds they want, eliminating the need to re-trade and finance unwanted inventories, achieving higher margins.
- Allows continuous sales versus fixed sales cycles, smooths out revenue streams.
- Is integrated with blockchain technology, so every rough diamond is tracked with a secure and immutable record of its origins and ownership, providing peace of mind for consumers.